Medical debt is one of the most common reasons for families to file bankruptcies. In fact, serious medical debt is most often the culprit for folks in financial trouble. Around one out of five adults is currently paying some form of debt for a medical bill. The combination of increased medical expenses and a reduced amount of medical coverage has forced some families to eat up their savings or incur debt via credit cards or personal loans.

A medical emergency doesn’t need to turn into a financial emergency, however. Know what to expect and you can handle the scary issues of billing, penalties and fees, too.

Understanding how it happens

When you get medical treatment, the bill is probably the last thing on your mind. Having said that, once the procedure or treatment is done, understanding the financial side of things can be truly overwhelming. Hospital bills can be especially confusing, as there are often bills from several different components including the ambulance, the hospital itself, the lab, the pharmacy and any doctors or specialists you might see.

Even standard treatments and office visits can lead to medical debt. If your doctor’s office bills your insurance provider, you’re still liable to make sure it gets paid. Sometimes, insurance companies won’t follow through, and you can be on the hook for the bill.

Medical debt and credit cards a deadly cocktail

Many doctors and healthcare providers allow patients to use credit cards to pay their bills. In some cases, providers may even offer a discount for paying with a credit card. However, credit card debt is less desirable than medical debt. The debt turns into consumer debt, meaning that now you can incur fees and penalties. This kind of debt also has a more significant effect on your ability to get a mortgage or pass a credit check.

Putting your home at risk

Some families have turned to home equity loans to pay medical bills. Borrowing against the value of your home can be equally dangerous, and it can create a bill that’s higher than the medical bill originally. It can also mean adding an interest payment or having to pay points. This, in turn, will fuel more debt. Medical debt is unsecured debt, backed by your home. If you can’t pay the debt off, there is always the danger that you could lose your home.